Slim chance of European naphtha deep-sea inflows for Asia

29 August 2012 09:29[Source: ICIS news]

SINGAPORE (ICIS)--The chances of Asia receiving fresh naphtha deep-sea supply from Europe for October arrivals are slim, as the east-west spread has almost halved from levels earlier this month, traders said on Wednesday.

The east-west spread, which measures the profitability of bringing European naphtha to Asia, lost 45% from early August to $8.75/tonne (€7/tonne), they said. On 3 August, the east-west spread stood at $15.87/tonne, traders said.

While the arbitrage window is closed on paper, some traders said that heavy naphtha supplies from northwest Europe could be moved to Asia where the premiums remain attractive.

“You could still get heavy full-range grades. The premiums are better this side,” said a trader, referring to premiums at $5-10/tonne in Asia.

The premiums of heavy naphtha are underpinned by the firm fundamentals in the downstream benzene and para-xylene (PX) segments, traders said.